Business

Energy Rebate: A Gamer Changer for Industrialization

By Aminah Namuddu

Entrepreneurship is a strong driver of economic growth, competitiveness in globally linked markets, and jobs. As Uganda aspires to transform from a peasant to a modern and prosperous Country within 30 years, entrepreneurship and industrialization have been prioritized as key enablers of the Industrialization agenda.

In that regard, the Government has embarked on several programs to fully utilize its available workforce which is 77 percent youth (mostly below 30 years). Through programs such as the ‘Youth Livelihood’ program, the youth are being empowered with skills and financial resources to start up small business enterprises such as maize milling, shoemaking, furniture processing, among other business ventures, in order to eradicate poverty and improve the livelihood of Ugandans.

However, for these Government programs to materialize, the essential enablers of business have to be in place and with no doubt, access to Electricity tops the list.

Access to Electricity services is critical to Uganda’s transformation agenda and the lack of it in many cases has caused good business ideas to stay on paper. In some unfortunate cases, facilities have been established but business is delayed until Electricity access is enabled through a scheduled grid extension.

Whilst some individuals possess the financial muscle to fund grid extensions to their premises, they hesitate to invest because the burden is too big to bear. In addition, in the event that the customer chooses to fund the grid extension, after the network is constructed, other consumers are connected without contributing to the initial cost incurred by the financier, which arrangement many find unfair.

Such circumstances have affected entrepreneurship for a long time but the game has finally changed, thanks to the recently established Energy Rebate framework.

Energy Rebate – How it works

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Through the Energy Rebate framework, the Government allows consumers to fund grid extensions and recover their investment gradually. The implication of this is faster turn-around time for setting up new businesses. Simply put, entrepreneurs no longer have to suffer long waits for Government grid extension plans to materialize before they can execute their business ideas.

Through this framework, consumers can use personal financial resources to facilitate the construction of distribution networks and receive a refund for their investment over a period of three years.

Launched in 2018, the Energy Rebate framework allows a consumer to receive compensation for approved investments in Industrial Power Line extensions undertaken as part of customer connection installations.

The compensation is undertaken by a Distribution Utility over time through offsets of monthly Energy billed to the customer, subject to conditions highlighted in the Energy Rebate Guideline.

Who Qualifies?

The framework targets Industrial Consumers in the categories of Medium (Low Voltage 415V), Large (High Voltage 11,000V or 30,000V, with maximum demand exceeding 500kVA) and ExtraLarge (High Voltage 11,000V or 30,000V, with maximum demand exceeding 1,500kVA and dealing in manufacturing).

Key Facts

Consumers do not need to worry about maintenance of the network constructed because the infrastructure is transferred to

the Utility in charge upon commissioning. Maintenance of the network remains the responsibility of the Utility.

The costs are pre-approved, before the customer constructs the infrastructure. Rebates do not exceed 40% of the pre-taxed Energy (no other charges) bill and recovery is allowed over 36 (thirty-six) months from the month of the first bill in respect of Energy consumed via the infrastructure.

Rebates do not cover costs of way-leaves and financing costs and additional costs incurred by the customer after ERA’s approval. The costs approved by ERA may include costs of materials, labor and transport.

The infrastructure established should support the connection of at least 10 Domestic Customers.

Improvements in its current form, the framework targets Industrial Consumers in designated Industrial parks. However, after comprehensive stakeholder engagement, ERA is reviewing the framework to eliminate the limitations and allow for more consumers to benefit.

The Energy Rebate guideline can be accessed through the ERA website: www.era.or.ug.

The framework is already being implemented by the Authority. Interested parties are encouraged to apply for rebate through their Electricity Distribution Companies.

Broader Plan

The Energy Rebate is part of a wider Government Plan to accelerate access and grow demand.

Several other initiatives are being implemented such as the Electricity Connections Policy that allows persons within a 30 to 90-meter radius from the existing distribution network to receive free connection to Electricity. The Government has also established another program that involves extension of credit facilities for new connections, being implemented through the Uganda Energy Credit Capitalization Company (UECCC).

Do not let the absence of Electricity infrastructure delay that business idea you have. Invest in extending power to your factory and receive a refund for your investment.

The writer is the Communication Officer, Electricity Regulatory Authority

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